.$1b smuggled to Afghanistan
ISLAMABAD: Around $1 billion has been illegally transferred to Afghanistan during the last two months which led to worsening the country's financial crisis, well-placed sources said. "Dollars are being shifted to Afghanistan at an alarming rate of $8-10 million on a daily basis. The government is trying to stop this illegal process", a senior government official told The Post.
Quoting official reports, he said, "This dollar smuggling was the main reason for a massive devaluation of the Pakistani rupee in the recent weeks.".
Not all the smuggled funds are for immediate use in Afghanistan, with large amounts being transferred to Dubai in the UAE. The government has blamed the present decline in the currency on the policy of its predecessor administration under Prime Minister Shaukat Aziz, saying it maintained an artificially high rate of 60 and 62 rupees to the dollar. Pakistan officials are in talks with the International Monetary Fund (IMF) for a rescue package aimed at helping the country resolve balance of payments difficulties will face harsh demands rather than negotiating points. The United States is using the Washington-based and largely US-financed IMF as a tool to impose its own terms and conditions related to the 'war on terror' in which Pakistan has been declared by the US as a major theater of war.
"The IMF does not negotiate but dictates its terms and this time the US has in fact pressurized Pakistan to turn to the IMF by not giving much-needed cash to the country at the meeting last month of the Friends of Pakistan", says economist Shahid Hassan Siddiqi. The United States and Britain jointly launched an initiative to form 'Friends of Pakistan' last month as alarm grew over the country's gradual economic meltdown, with fears increasing that financial chaos may allow terrorists to deepen their roots in Pakistan.
The 'Friends' delegation includes representatives of the United States, Australia, Canada, Italy, Germany, Saudi Arabia, China, the United Kingdom, the United Arab Emirates (UAE) and Turkey. The group's first working session will be held in Abu Dhabi in the UAE on November 17.
The government says it has not yet formally asked the IMF for a loan facility and that it would borrow money from the IMF as its last option on its own terms and conditions. While talks with the IMF continue, the government is trying to build public opinion in favour of an IMF program. An IMF-assisted plan may require Islamabad to cut defense, development and other current spending and raise taxes, which could hurt the poor.
The government has already decided to bring non-taxpayer sectors into the tax net and to increase the tax-to-gross domestic product ratio to 15 percent from the present 10.5 percent.
Media reports suggest Pakistan may have a chance to skip IMF for the next few months as Saudi Arabia has committed to give $4 billion to the country and provide the oil facility on one-year deferred payments. Ostensibly, Saudi Arabia decided to help Pakistan in overcoming the economic quagmire during the recent meeting between King Abdullah bin Abdul Aziz and President Asif Ali Zardari, Saudi Arabia is expected to make a formal announcement in this regard at the meeting of the 'Friends of Pakistan'.
Pakistan is aiming to accumulate $25 billion, which may be enough to bring the economy back on track for the next 10 years. Pakistan needs more than $5 billion within a month to meet its international obligations.
If, everything does not happen as planned, Pakistan will have to go to an IMF programme sooner or later under extremely tough conditions. Having nodded in affirmative, Pakistan will get $9.6 billion from the IMF during the next three years at a mark-up rate of 16.7 percent per annum.
The Post
Quoting official reports, he said, "This dollar smuggling was the main reason for a massive devaluation of the Pakistani rupee in the recent weeks.".
Not all the smuggled funds are for immediate use in Afghanistan, with large amounts being transferred to Dubai in the UAE. The government has blamed the present decline in the currency on the policy of its predecessor administration under Prime Minister Shaukat Aziz, saying it maintained an artificially high rate of 60 and 62 rupees to the dollar. Pakistan officials are in talks with the International Monetary Fund (IMF) for a rescue package aimed at helping the country resolve balance of payments difficulties will face harsh demands rather than negotiating points. The United States is using the Washington-based and largely US-financed IMF as a tool to impose its own terms and conditions related to the 'war on terror' in which Pakistan has been declared by the US as a major theater of war.
"The IMF does not negotiate but dictates its terms and this time the US has in fact pressurized Pakistan to turn to the IMF by not giving much-needed cash to the country at the meeting last month of the Friends of Pakistan", says economist Shahid Hassan Siddiqi. The United States and Britain jointly launched an initiative to form 'Friends of Pakistan' last month as alarm grew over the country's gradual economic meltdown, with fears increasing that financial chaos may allow terrorists to deepen their roots in Pakistan.
The 'Friends' delegation includes representatives of the United States, Australia, Canada, Italy, Germany, Saudi Arabia, China, the United Kingdom, the United Arab Emirates (UAE) and Turkey. The group's first working session will be held in Abu Dhabi in the UAE on November 17.
The government says it has not yet formally asked the IMF for a loan facility and that it would borrow money from the IMF as its last option on its own terms and conditions. While talks with the IMF continue, the government is trying to build public opinion in favour of an IMF program. An IMF-assisted plan may require Islamabad to cut defense, development and other current spending and raise taxes, which could hurt the poor.
The government has already decided to bring non-taxpayer sectors into the tax net and to increase the tax-to-gross domestic product ratio to 15 percent from the present 10.5 percent.
Media reports suggest Pakistan may have a chance to skip IMF for the next few months as Saudi Arabia has committed to give $4 billion to the country and provide the oil facility on one-year deferred payments. Ostensibly, Saudi Arabia decided to help Pakistan in overcoming the economic quagmire during the recent meeting between King Abdullah bin Abdul Aziz and President Asif Ali Zardari, Saudi Arabia is expected to make a formal announcement in this regard at the meeting of the 'Friends of Pakistan'.
Pakistan is aiming to accumulate $25 billion, which may be enough to bring the economy back on track for the next 10 years. Pakistan needs more than $5 billion within a month to meet its international obligations.
If, everything does not happen as planned, Pakistan will have to go to an IMF programme sooner or later under extremely tough conditions. Having nodded in affirmative, Pakistan will get $9.6 billion from the IMF during the next three years at a mark-up rate of 16.7 percent per annum.
The Post
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